Gindalbie Metals says it has begun drawdown under its $US1.2 billion project loan facility for the Karara iron ore project.

The company said the first tranche of debt funding would supplement existing equity funds of about $60 million held by Karara Mining, its joint venture company with Chinese partner AnSteel.

"This will enable the continued ramp-up of on-site construction activities at Karara," Gindalbie said in a statement.

The 12-year loan facility is being provided by China Development Bank and Bank of China.

Gindalbie managing director Garret Dixon said debt and equity funding for Karara was now settled and construction teams were moving into top gear across all aspects of the project.

Production is expected to begin next year.